Santa Cruz will appeal university water ruling rather than redo environmental review

SANTA CRUZ -- The city of Santa Cruz will appeal a recent ruling that invalidated an environmental analysis of long-standing plans to expand water and sewer service to an undeveloped corner of UC Santa Cruz's north campus targeted for growth.

In a closed session Tuesday, the council authorized its environmental legal team to challenge the Nov. 27 ruling by the state's 6th District Court of Appeal, which found the city misstated the purpose of the expansion and therefore did not properly describe alternatives as required by state law.

The ruling by a three-judge panel ordered fixes to an environmental impact report and halted a local commission's review of four-year-old applications to expand the city's service area and provide up to 100 million gallons of additional water to the university for new academic and housing buildings. The decision carries repercussions for a landmark 2008 agreement between the city and university that largely contained UCSC growth to the campus.

Sabrina Teller, a partner with the Sacramento law firm of Remy Moose Manley, said Wednesday the city will seek a change in opinion or ask for a rehearing. If unsuccessful, the city will petition the state Supreme Court.

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Although a review by the high court is widely seen as a long shot considering the few cases it accepts, Teller said, "If we didn't think it has potential, we wouldn't make that effort."

Teller said the city disagrees with how the appellate judges described the authority of the Local Agency Formation Commission charged with approving the expansion and how that colored the court's view of the city's dismissal of alternatives, such as a smaller expansion or limiting growth to the main campus.

Without going into much detail because she is still preparing arguments, Teller said, "We think there are some factual and legal issues that the court may have misunderstood from the record and weren't fully briefed by the parties."

WHAT THE COURT SAID

Judges Nathan D. Mihara, in concurrence with Judges Franklin D. Elia and Miguel Márquez, found in favor of the city on a critical issue: whether the city's vulnerable water system can actually supply more water to its largest customer.

The judges noted the amount of water wouldn't significantly impact the city's overall water problem, which is having enough to serve all customers during dry years while also facing mandated cutbacks from the San Lorenzo River and North Coast streams to boost endangered and threatened fish habitat. The judges also approved of the city's discussion of conservation, curtailment and potential construction of a seawater desalination plant as supply-and-demand remedies.

Where the judges agreed with Habitat and Watershed Caretakers, a group that filed the original lawsuit, was that the purpose of the project was improperly described. The judicial panel said the report incorrectly asserted that the project existed because the city was obligated to provide the water based on the 2008 agreement to largely restrict university growth to the north campus.

The judges said the city was not required to actually extend the water unless LAFCO approved. Therefore the purpose of the project, the judges ruled, should have been only to provide environmental information to LAFCO so it could reach a decision.

Santa Cruz Mayor Don Lane, who also serves as a LAFCO commissioner, said the court seemed to identify LAFCO as the top decision maker when the city already had agreed to supply the water, an amount which represents 66 percent more than what UCSC used in 2011. The city has long said it doesn't have the right to block university growth, and that by winning a concession to house two-thirds of future growth -- about 3,000 students -- on campus it avoided increased traffic, housing and water use in town.

"We have to correct the facts now," Lane said, explaining the council's unanimous decision to seek an appeal rather than begin rewriting parts of the environmental report as ordered by the court.

Lane said getting the appellate process going would cost at least $30,000, but costs for a Supreme Court petition would be greater and are not immediately known.

Don Stevens, a member of the habitat group that filed the suit, said, "If they are going to spend a lot more money, it would be nice to get some public comment about it."

MOVING AHEAD

If the city is ultimately required to change the environmental analysis, it would require new public hearings and certification by the City Council. Teller, the city's environmental attorney, said it's too early to know how long that process might take.

The city and university filed applications with LAFCO shortly after the 2008 settlement agreement, but LAFCO said greater environmental review was needed. After the council approved the analysis in August 2010, the habitat group filed a suit that was first dismissed by a Santa Cruz judge.

Pat McCormick, executive director of LAFCO, said he did not believe his agency, as the appellate judges suggested, was constrained by the alternatives as described in the environmental document. He said the commission has always been free to condition the project, including requiring the city to offset the new water service through university conservation, fees or other means.

"It's not like we were solely limited to what was in the EIR," McCormick said.

Campus architect John Barnes said the appellate ruling has no immediate effect on UCSC building plans or the growth settlement agreement because capital projects funding is still mired in chronic state budget troubles. But that may not always be true.

"While UCSC doesn't currently have a housing project proposed for the area north of the current campus footprint, it's feasible that we could in the not-too-distant future," Barnes said. "At some point, continued legal delays or LAFCO delays do have the very real potential to delay or derail our plans to fully implement the housing component of the settlement agreement."